Conditional Gifts Are Incomplete Until Conditions Are Complied With; Such Gift Deeds Can Be Cancelled By The Donor: SC [Read Judgment]

‘A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor the deed of gift might be cancelled.’

The Supreme Court has held that a conditional gift only becomes complete on compliance of the conditions in the deed, and the donor is within rights to cancel such a gift deed.

The bench comprising Justice Arun Mishra and Justice Indira Banerjee was considering an appeal against Kerala High Court judgment.

Sarojini Amma had executed a gift deed in favour of her nephew Sreekumar. The gift deed clearly stated that the gift would take effect after death of herself and her husband, and that the condition was that the donee would look them. Later, in the year 1999, Sarojini Amma executed deed of cancellation, cancelling the gift deed. This was challenged before the Munsiff court by filing a suit, which was decreed. The district court upheld the decree, but the high court set aside the concurrent findings and dismissed the suit.

The high court, while dismissing the suit, had heavily relied on Reninkuntla Rajamma vs. K. Sarwanamma, wherein it was held that the donor had reserved the right to enjoy the property during her lifetime and it did not affect the validity of the deed.

Referring to provisions of the Transfer of Property Act, the bench said a conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during the lifetime of the donor. When a gift is incomplete and title remains with the donor, the deed of gift might be cancelled, it added.

On the above referred judgment, the bench said: “We are in agreement with the decision of this Court in Reninkuntla Rajamma (supra) that there is no provision in law that ownership in property cannot be gifted without transfer of possession of such property. However, the conditions precedent of a gift as defined in Section 122 of the Transfer of Property Act must be satisfied. A gift is transfer of property without consideration. Moreover, a conditional gift only becomes complete on compliance of the conditions in the deed.”

The court also said the deed of transfer was executed for consideration and was in any case was subject to the condition that the donee would look after the woman and her husband, and subject to the condition that the gift would take effect after the death of the donor.

“We are thus constrained to hold that there was no completed gift of the property in question by the appellant to the respondent and the appellant was within her right in cancelling the deed,” the bench said setting aside the high court judgment.

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